Hosting a World Cup or Olympics is a famously expensive endeavor. For our “Econ Extra Credit” series, we covered this year’s soccer World Cup in Qatar, which was estimated to have cost the country over $200 billion with no real way for it to make up the costs.
So what about the Summer Olympics that will be held in Los Angeles in 2028? The City of Angels will host the Games for the third time. The last time it did so, in 1984, it turned out one of the only profitable Olympics in history, with an estimated budget surplus of over $200 million.
LA’s estimated cost for the forthcoming games stands at $6.9 billion as of 2022, but city officials say that the entire amount will be funded without extra burden to taxpayers. LA28, the private organizing committee in charge of putting together the games, says TV deals, commercial sponsorships, ticket sales and negotiated funding from the International Olympic Committee will pay for the event — the city and the state of California will serve as backstops if there are cost overruns.
One source of savings, according to organizers, will be the use of existing sports infrastructure in lieu of expensive new construction. While the 2022 World Cup serves as an example of a host shelling out hundreds of billions to build stadiums and fund other infrastructure and amenities, outgoing Los Angeles Mayor Eric Garcetti presents the opposite case for his city. He says LA’s legacy of financially well-managed Olympics will continue into 2028.
“We finished [in 1984] with a $215 million surplus that has funded youth sports programs and fields for decades since,” Garcetti said in an interview with Marketplace’s David Brancaccio. “And I have that same confidence in 2028 because Los Angeles is already a built-out sports town.”
The following is an edited transcript of their conversation.
David Brancaccio: Qatar spent a fortune getting ready for the World Cup. They made their own decisions. We’ll see if their cost-benefit analysis as they see it works out in the end. But tell me about your city — Los Angeles, 2028. The Olympics are coming back. You won’t be mayor, but what is it, your hope, that they won’t lose money like some other cities have?
Eric Garcetti: Well, I think people and leaders in most cities are right to be skeptical of these large sporting events that can cost a lot of money, leave behind a lot of white elephants, have abandoned venues. But Los Angeles has always been different. In 1932, we made a million dollars off the Olympics the first time it came to our city. We became one of the first cities to host two Olympics. And in 1984, we changed the model. Peter Ueberroth, legendary head of those Olympics, brought in sponsorships, helped revive the Olympic movement. And we finished with a $215 million surplus that has funded youth sports programs and fields for decades since. And I have that same confidence in 2028 because Los Angeles is already a built-out sports town. We’re not building an Olympic Village for the athletes, we’re using dorms at the University of California, Los Angeles — UCLA. So we really tried to change the model again to say, “Look, you need to make sure that … the Games [are] fitting inside the city’s needs and infrastructure,” rather than the city trying to fit into the Games’ needs and the Games’ demands of new infrastructure, which so often, time and time again, does leave governments holding the wallet from Montreal to Beijing to other places where, you know, Athens, you see abandoned venues or infrastructure projects that really were about 2½ weeks of a city’s life instead of the 2½ decades that follow. That’s the right approach: Think about your city first and invite the Games to be a part of that. Not think about the Games first and try to get the city to do whatever they demand.
Brancaccio: I remember because, as you said, that was the model in 1984, which is, “We’ll do it, but we’re going to use mainly existing facilities.” It wasn’t just UCLA back then, I think even [the University of Southern California] and other places. They didn’t lean on you too hard to build more and fancier stuff for 2028?
Eric Garcetti: No, I think the Olympic movement understands that it’s tougher and tougher to find willing cities. In fact, Boston won the bid the year we went after the Games, and initially, we were pursuing the 2024 Games. And then just by kind of popular uprising in Boston, people realized how expensive it would be to build a lot of these venues. Here in Los Angeles, we already have the nation’s best velodrome. We’ve got tennis courts, we’ve got multiple arenas that we play basketball and volleyball and other sports in all the time. So we kind of said, look, this is already here. We also told them we’re going to recycle things, we’re going to reuse things. We might take, you know, seats from Paris, the ’24 Games, and use them in the ’28 Games. We’re going to look at existing facilities, even outside the city, so that we can put the Games money into a legacy. And in fact, we negotiated ahead of time, first time ever in the Olympics, $160 million years before the Games start from the Olympic Committee. So we’re spending that right now on youth sports access for everything from parasports for folks who live with disabilities to kids growing up in poorer neighborhoods of our city to have access to swimming and to golf and to equestrian and coaches and fields so that we build a legacy before it even starts. And with the surplus that I know we will have after the Games, just as we did in ’84, we’ll ensure that, that access to sports won’t be dictated for our youth by a ZIP code, by the color of your skin, by the language your parents speak, but will be equalized across LA. And I think that excited the Olympics, and every single time LA has hosted the Games, we’ve been a games-changer. In ’32, we had the first Olympic Village, ’84 the first private sponsorship. And in ’28, I think you’re going to see an Olympic movement that realizes it should be more humble, it should be more accepting of existing infrastructure, and that it should really listen to cities’ needs above their own and then see how the Olympics can fit into that, not vice versa.
Brancaccio: So there’s the not losing money. There’s the direct benefit of things you’ve negotiated in advance. There’s also this mushy stuff, but mushy in a good way. It’s often referred to on balance sheets as “goodwill.” I mean, you do expect something out of it that maybe you can’t quite quantify?
Garcetti: Absolutely. I mean, there’s definitely the billions of dollars of economic activity. And we’re hoping that America embraces this as the American Games. You know, Paris isn’t just about Paris, it’s about France. When it’s in Tokyo, that’s a Japanese Olympics, and we want all of America, whether it’s in preliminary events that we might have in other states or some ways that we can share this across the United States. We want to ignite kind of the best of what the Olympic spirit is. I mean, one of the reasons I love it so much is when I was a kid in 1984 — I was 13 years old — and I saw the world come to my city. I saw 100,000-plus volunteers in my city who still talk about it today. “Hey, I did volunteering seating people at the swimming stadium” or “I was out there and got to see, you know, Carl Lewis win the 100-meter race.” It really brings a civic spirit together within a city. But it also unites the world. It’s the one place North Koreans and South Korean athletes will sit down and have lunch and dinner together. As an African athlete told me, “Yeah, the United States might be the biggest, most powerful country in the world. But when I marched into the stadium in my Olympics, all of us felt like we were finally equal on this Earth.” So we already have thousands of people who have volunteered to participate in the Games as volunteers. We have people who are launching acceleration of transportation projects, art and culture projects. It really is a point on the horizon, just for 2½ weeks to have the Paralympic Games and the Olympic Games, another two weeks for the Paralympic Games, so 4½ weeks of competition, but it helps align a decade of activism, of activity, of investment. And to me, that’s really exciting. To me, it’s left behind a legacy from 1984 that’s lasted till today. It’s one of the reasons, you know, 80%-plus of Angelenos are supportive of the Olympics, when around the world, those numbers probably are much lower. We understand the Games, we know how to do them successfully. We know how to build a legacy. And it’s just a great kind of, as you said, squishy thing where you feel that idealism of the Olympic truce, of a moment when the world stops warring, stops fighting, stops being divided and actually comes together for human competition and seeing the very best in humanity.
Brancaccio: I know, having spent many years in your city, it’s not like the traffic can be made much worse. So maybe that’s not on people’s minds as it might be in other places.
Garcetti: Well, I joke probably the other 20% embrace the Games because they remember in 1984, it was the least traffic we ever had. So they said, they’re saying, “Look, I’ll support the Games if you promise me in six years I’ll have at least a couple of weeks I can drive through this town without traffic.” [Laughter]
Brancaccio: So your days as mayor are numbered. You won’t be mayor when this all happens. But at some level, the Games will be associated with you. So you have an interest in their positive outcome. Are you going to keep a hand in some way?
Garcetti: You know, I trust the team. Our chairman, Casey Wasserman, an old friend who I asked to step up and kind of be that Peter Ueberroth of our generation, is an amazing leader. We’ve got such top-notch athletes who are engaged from the American athletic community. I’ll look forward to going there with my daughter, Maya, who would have been 13, just like me [in 1984], in 2024. But since we won the ’28 Games, she’ll be 17 years old. And the same memories I have with my father and mother and sister watching the gymnastics, watching track and field, the closing ceremonies, to me, it was a gift to her and to her generation. And there’s actually kids today because we’ve had so much time — this was the longest preparation of any city ever for the Games because we won it, you know, with a good 10 years to plan — they’ll be able to plant the seed, I think, for a lot of kids that say, “Hey, I’m going to participate in sports.” And we might even get the next generation of gold, silver, bronze medalists actually growing up in this city and winning a medal in the very same hometown that they were raised in.